Are you liable to UK IHT?

  • Individuals are liable to pay IHT when they consider the UK as their homeland or “domicile”. The domicile issue can be very complicated; normally a person acquires their domicile status from their parents at birth.
  • If any individual remains in the UK for a period of 17 out of 20 years, that person will be “deemed domicile” and face IHT as if the UK had always been their domicile from birth.

If you are uncertain or require advice, we may be able to help.

When would I be required to pay IHT?

  • Those liable to UK IHT have a band in which their estate is not liable for IHT; this band is known as the nil-rate band. Where an individual’s net estate falls within this band, no IHT is due on that person’s estate. The current nil rate band is £325,000 (tax year 2013/14). Where an individual’s estate exceeds £325,000 tax is due at 40% on the surplus.

If you require assistance with your calculations or you are unsure if an asset is taxable, please give us a call.
Is there anything you can do to limit or plan for IHT?

Below are a few things for you to consider as a start, but please do call us to speak to a Financial Adviser and allow our experts to maximise what you pass on to your loved ones.

  • Transfer between spouses and civil partners are exempt from IHT (limited to £55,000 where the receiving spouse is not UK domiciled)
    • Lifetime gifts of £3,000 per tax year gifted to another individual are exempt
    • Lifetime gifts of £250 per tax year gifted to any number of individuals are exempt
    • Habitual transfers made from normal expenditure is exempt
    • Gifts on marriage (various limits apply)
    • Gifts for education and maintenance
    • Gifts to charities and political parties
    • Gifts for the national benefit

There are other major ways we can help you to plan for IHT which utilise UK legislation, in fact, depending on your circumstances, we may be able to reduce or completely eliminate it.

Effective planning will take account of a broad range of factors which include:

  • Maintaining suitable access to income and capital
    • Tax efficiency
    • Protection of the assets from divorce, bankruptcy and other threats
    • Protection from irresponsible beneficiaries
    • Providing for vulnerable or minor beneficiaries

To find out more about inheritance tax planning contact Crystal Asset Management today!